Briefing highlights
- Canadians working longer
- U.S., China to resume trade talks
- Stocks, loonie, oil at a glance
- Toronto, Vancouver home sales rise
- Slack shares tumble on outlook
- Samsung folding phone to debut Friday
- What to watch for today
- Required Reading
Freedom when, exactly?
Can we ever retire?
Indeed, BMO Nesbitt Burns senior economist Robert Kavcic flagged the issue of Freedom later in life in a broader study on the impact of falling interest rates.
He looked at those declining rates, Canada’s low saving rate and the rising share of seniors in the work force, concluding that you can save more or work later in life, and that we’re “opting for the latter” these days.
Source: BMO Nesbitt Burns
“If long-term return expectations are lower for planning purposes going forward, then Canadians can respond in two basic ways: save more of every dollar earned, or work longer,” Mr. Kavcic said in his report.
“The trouble is, when interest rates are so low, the incentive to save is reduced,” he added.
“Indeed, Canada’s household savings rate has averaged barely above 1 per cent over the past four quarters, a record low.”
The “flip side” to that, as Mr. Kavcic put it, can be seen only too well is this chart.
Source: BMO Nesbitt Burns
As the BMO economist noted, the participation rate among those 65 and up has jumped to 15 per cent, or more than double the level of 10 years ago.
“Put another way, there are now almost 600,000 more Canadian seniors in the labour force than there would otherwise be had participation not already risen.”
Asked whether Canadians are working longer because they have to or they want to, Mr. Kavcic said he believed both are reasons.
“And keep in mind that working longer doesn’t necessarily mean grinding out the same hours you did when you were 45,” he added.
“Even if someone scales back to part-time hours, they’d still be counted in the labour force.”
Seniors in Canada are clearly feeling the pinch.
While the overall loan delinquency rate in Canada is small, seniors in particular are having a tougher time.
Indeed, according to the latest report from Equifax Canada, in mid-June, seniors “continued to lead the way higher” with a rising loan delinquency rate in the first quarter of the year.
Read more
- Rob Carrick: The rising interest rate scare is over – now lower rates are the big threat to your finances
- Bill Curry: Bank of Canada holds rates steady but flags global trade concerns
- David Parkinson: The Bank of Canada takes a wait-and-see stance, hoping the economy is strong enough to buy it some time
U.S., China to resume talks
The U.S. and China plan to resume negotiations to end their heated trade war in October, with Beijing saying it hopes for no further escalation.
Chinese vice premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin spoke by phone today, agreeing to meet in Washington, Beijing’s commerce ministry said.
“Putting to one side the fact that these talks were supposed to be happening this month, and the fact that this has been a familiar pattern for two years now, markets still prefer to take an optimistic view,” said CMC Markets chief analyst Michael Hewson.
“For now it appears that markets are looking to the horizon with optimism, then we’ll probably follow a familiar playbook of another President Trump twitter tantrum, which will send markets lower, before we get more talk of possible talks, which then sees markets rise again, before a rinse and repeat.”
Mr. Hewson raised these issues with good reason. The up-and-down nature of the U.S.-China tariff war, and the response of markets, has been a pattern for some time now.
“At the risk of being cynical, we’ve been here so many times before and been disappointed so there is little expectation that this rebound will be any different,” he said.
“There is also the not insignificant fact that tariff levels are well above the levels they were at the beginning of this year, and that more than anything ought to inform markets as to how much progress we’ve made thus far.”
Read more
- China, U.S. to hold trade talks in October - China commerce ministry
- U.S.-China trade war is smiting Canada’s economy (and alarming the Bank of Canada)
Markets at a glance
Read more
Toronto, Vancouver home sales climb
Home sales rose in Toronto and Vancouver last month as buyers returned to the market in Canada’s two most expensive cities, signalling that many Canadians are adapting to the country’s tougher mortgage stress-test rules, The Globe and Mail’s Janet McFarland and Brent Jang report.
Toronto continued to show stronger signs of growth, with sales climbing 13 per cent in the Greater Toronto Area in August compared with the same month last year, according to the Toronto Real Estate Board (TREB). New listings fell and prices posted a gain of 3.6 per cent, averaging $792,611 for all types of homes last month.
By comparison, sales picked up in the Vancouver region as prices declined to their lowest level in 27 months and total listings increased.
“So far, this is a near-perfect landing from a policy maker’s perspective, and the Bank of Canada didn’t seem too worried yesterday about stoking another positive run,” BMO’s Mr. Kavcic said of the Toronto market.
Read more
Ticker
Slack shares sink
From Reuters: Shares of Slack Technologies Inc. tumbled after the workplace messaging firm warned of slower revenue growth amid intensifying competition.
Samsung folding phone to debut Friday
From The Associated Press: Samsung says it will start selling its highly anticipated folding phone on Friday, after the original launch date was delayed by months because of embarrassing problems with the screen.
Nissan chief apologizes for pay
From Reuters: Nissan Motor Co. was embroiled in another scandal over executive pay on Thursday after chief executive Hiroto Saikawa admitted to being overpaid in violation of internal procedures under a scheme designed by ousted Chairman Carlos Ghosn. He apologized and vowed to return any improperly paid funds as he admitted to Japanese reporters that he had wrongly received stock-related compensation under “a scheme of the Ghosn era.”
What to watch for today
Lululemon Athletica and Transcontinental are among the companies reporting quarterly results.
Required Reading
Court allows Trans Mountain challenge
The federal Court of Appeal has allowed a legal challenge to the Trans Mountain Pipeline expansion project to proceed, just as construction – delayed by earlier court battles – is resuming both in British Columbia and Alberta. Justine Hunter and Jeffrey Jones report.
Don’t give up on the Big Six
Canadian bank stocks have failed to generate any meaningful gains over the past two-and-a-half years, but David Berman explains why you shouldn’t give up on them now.
Canada should cut trade reliance on China: report
The economic punishment Beijing has inflicted on Canadians after the extradition arrest of a top Chinese executive last December should spur Canada to reduce its trade reliance on China, a new paper from the Macdonald-Laurier Institute says. Steven Chase reports.